Contributor: Bombykol
Alfonso Soriano's current contract runs 8 years and will pay him $136 million...no kidding. To you non-Cubs fans out there who want to understand what it feels like to have such an albatross on your roster, try repeatedly slamming your testicles with a car door. While staggering at first glance, Soriano's contract was not an isolated faux pas in an otherwise discriminating environment. Riding the coat-tails of a season that shattered the previous MLB attendance record, the free-agent market of 2006 was both rabid and ridiculously detatched from any reasonable method of player valuation. And not just for perceived "stars," either; in the two-year period from '06 to '07, $140 million dollars worth of contracts were handed out to the immortal trifecta of Gary Matthews Jr, Jeff Suppan and Carlos Silva. These players have contributed a combined -0.7 WARP in 2009, not exactly bang for one's buck. All the more shocking, in a world where Kei Igawa is still owed half of his $46 million dollar contract (he was signed for 5 years in December of '06), Soriano's deal may soon stand out as the worst in the sport. Though many Cubs fans have been disappointed with Soriano's lackluster production during his time with the club, no. 12 has still managed to put up decent numbers, while "leading" his clubs to N.L. Central crowns of the past two seasons. But now, with Soriano mired in a season-long slump that has seen him--amongst other things--abandon base-stealing, even the most optimistic of bleacher creatures has to be growing concerned about the future. How's Soriano's $18 million annually going to look after next season, if he continues to post WARP's south of 2.0? Or in 2014, when the Cubs will be paying as much as 15-20% of their total payroll to the thrity-eight year old? Is Soriano's decline merely a prolonged statistical aberration, augmented by the stunning extent of his struggles and exacerbated by the neurotic hysteria of his home market? Or are these the symptoms of physical deterioration, early signs of an apocalyptic degradation in both ability and production for the Cubbie's cornerstone player? In short, what is Alfonso Soriano worth, and how much return can the Cubs [look forward to(?)] in the future?
Such an assessment requires an understanding of the value--namely the monetary value--of a win, an inherently difficult number to ascertain. The difficulty lies in the general lack of data available on team revenue; generally teams are operated as small trusts under private ownership, or as part of large conglomerates (such as Anheuser-Busch, STL) in which the team is merely a miniscule portion of a gigantic business. One exception, cited by Baseball Prospectus, was the Cleveland Indians, who filed financial disclosures with the SEC from 1998 to 2000. In doing so, the Tribe reported income from eight primary sources: ticket sales, local radio & television contracts, merchandise sales, MLB central fund allocation, concessions & catering revenue, postseason revenue (from 1997), private-suite & seat rental and revenue sharing. With this data, B.P.'s Nate Silver undertook the unenviable task of extending its learnings to the whole of Major League Baseball; even though Cleveland may have been a model franchise in the late-nineties, it certainly is not representative of the MLB as a whole. After all, MLB territory includes markets as fanatical and fervent as New York City, and as apathetic and indifferent as Miami; ballparks as beautiful and tantalizing as S.F.'s AT&T Park, and as decrepit and "derelict" as the H.H.H. Metrodome. Additionally, every stadium is priced differently, with a different number of luxury suites, and draws its fans from radically different populations (by per-capita income, amongst other things). Add in a plethora of social factors, past team performance, the well documented "honeymoon effect" associated with new stadiums, etc and you've got a veritable clusterfuck on your hands.
Without delving into the grizzly details of B.P.'s regression analyses (the full description is available on pages 174-196 of B.P.'s "Baseball Between the Numbers," which I would suggest you pick up anyways), and disregarding Silver's "linear model of player valuation," which downplays the observed non-linear bump in revenue a team can expect from earning a postseason bid, I would like to briefly outline the "two-tiered model of player evaluation," as it will be central to the coming discussion. Accounting for all reported revenue, and deducting revenue-sharing payments, an additional win was shown to be worth approximately $650,000, an additional playoff win, $25 million. Here's how it broke down categorically--the revenue generated by both a single regular-season win (and a single playoff appearance):
Gate receipts: $700,000 ($14,900,000)
Concessions: $215,000 ($4,500,000)
Luxury suites and club seats: $160,000 ($3,300,000)
Merchandise: $55,000 ($5,800,000)
Local broadcast rights: $0 ($14,100,000)
Playoff gate receipts: $0 ($5,800,000)
- Revenue sharing payments: $385,000 ($14,900,000)
Net: $650,000 ($25,000,000)
While these numbers are nearly a decade old, they are nonetheless useful, especially in light of how little data is actually available on the topic. However one glaring inadequacy in our methodology should be pointed out before we move one: all wins are not created equal. Using logistic regression analysis, and plotting the number of regular season wins (x) against the probability of that win total earning a team a playoff berth (y), one gets a sigmoid curve (essentially a variation of P(x)=1/(1+e^-x)). This means that a team (A) with 68 wins has virtually no shot of securing a playoff birth, a team (B) with 98 has virtually no shot of missing the playoffs, and a team (C) with 88-89 wins has essentially a 50-50 shot. Hypothetically, consider a situation where all three teams sign a free agent who provides a WARP value of 5.0 to replace a player with a WARP of 3.0. The move has essentially no value to teams A & B, as improving from 68 to 70 wins, or from 98 to 100, has virtually no bearing on the team's playoff odds; team A will still miss the playoffs in every conceivable scenario, just as team B will still be assured of a playoff berth. Team C, on the other hand, benefits immensely, as improving from 89 wins to 91 improves their playoff odds from 50% to almost 70%. Thus while teams A & B will gain approximately ~$1.0-1.2 million dollars from their free agent signing in marginal economic value ($500-600K per win), team C can expect returns upwards of $4 million...for a regular season win, nonetheless. However important this is, a teams can plan for it only to a degree; while the Cubs may have anticipated that an Alfonso Soriano-type player--coupled with a number of pitching upgrades--could vault them into contention in a weak N.L. Central, there is no way to anticipate the competitive balance of a division three, four or eight years down the line. (Although the Cubs may have won only 66 games in 2006, most recognized it as something of an anomaly, and regarded the Cubs as closer to 'team C' than 'team A.') Thus knowing that this is a long-term contract, we will evaluate it as such, disregarding marginal economic values in favor of the simple, linear valuation of a regular season win (~$650K).
Returning to the topic at hand, what does this mean for slump-ridden Alfonso Soriano, GM Jim Hendry (the man who signed off on his 8 year, $136 million contract) and the future prospects of the Chicago Cubs organization? To begin, let's return to 2004, a year that should have seen Soriano's value plummet in the wake of a [shockingly underpublicized] age scandal. Shortly after completion of the A-Rod swap, it was revealed that Soriano was 28 years old, not 26 as initially believed. The Rangers maintained that they were aware of this in advance of the trade, but as it was not grounds for voiding his new contract, whether or not this was damage control will never be known. What was known, at least by computer programs (such as PECOTA), was that this revelation sullied most of Soriano's accomplishments to date. Soriano's first extended stint in the major leagues came at age 25, not 23 as originally believed; Soriano may have evolved into a fine player just one season later, posting of WARP of 6.2, but the upside of a 26 year old is markedly different than that of a player two years younger. (Statistical savant Bill James has written that the peak years of a major league baseball player come between the ages of 25 and 29, with an absolute peak being reached at 27; he has subsequently stated that these numbers are likely over-estimations due to the increased longevities witnessed during the steroids era). In his age-26 season, PECOTA's top 5 comparisons for Soriano included Ernie Banks, Andre Dawson, Sammy Sosa, George Bell and Juan Samuel. For a 28 year-old Soriano, the names look a little different: Kelly Gruber, Gene Frese, Max Aviles, Raul Mondesi and (again) Juan Samuel. Downgrading one's comp from Banks to Mondesi is not exactly flattery, but PECOTA wasn't done: it also predicted WARP's for both a 26 and 28 year-old Soriano going forward:
2004: 5.5 v. 4.9; 2005: 4.5 v. 4.7; 2006: 4.4 v. 3.8; 2007: 4.3 v. 3.6; 2008: 3.7 v. 2.5
Examining his actual WARP performance over the same time period, Soriano has actually stacked up quite favorably (with the exception of 2005). No. 12's actual WARP's (and the difference between reality and PECOTA's projections) follow:
2004: 4.2 (-0.7), 2005: 1.9 (-2.8), 2006: 7.9 (+4.1), 2007: 6.8 (+3.2), 2008: 4.9 (+2.4)
Soriano has thus underperformed in two seasons and over-performed in three (26.2 actual WARP vs. 19.5 expected, +6.7 net), with two of those having been "legitimate" All-Star caliber efforts. While this represents a good performance when pitted against PECOTA's projections, WARP's in the 3.0-5.0 range are hardly elite; to the contrary, they are very pedestrian (for instance, Johnny Peralta averaged a 4.55 WARP between '05 and '08). This season, Arizona ace Dan Haren leads the majors in WARP-1 [the most basic incarnation of the statistic] at 14.3, and Albert Pujols has averaged a 9.4 mark over his nine-year career, while posting a 12.4 in '09. Additionally, it's hard to ignore the precipitous drop that Soriano has experienced every year following '06, including this season, where Soriano's WARP-1 is a measly 0.9, neck and neck with Angel Pagan and Matt Herges.
Following the 2009 season, Soriano's contract with Chicago will have payed out $41 million dollars. Assuming the WARP-1 Soriano has posted thus far in '09 holds, he has theoretically accounted for 12.6 additional Cubs wins over a replacement-level player (earning the league-minimum salary of $390,000) during that time period. The other half of the two-tiered model of player valuation, 'playoff appearance accounted for,' will be deduced by simply subtracting Soriano's WARP outputs from the team's overall W-L each season from '07-'09; if this adjusted W-L record places the Cubs out of the playoff picture, then Soriano will be directly credited with a playoff appearance(*).
2007 (actual): 85-77 (2.0 lead); (sans Soriano): 78-84 (5 GB)*
2008 (actual): 97-64 (7.5 lead); (sans Soriano): 92-69 (2.5 lead)
2009 (actual): 47-45 (2.0 GB); (sans Soriano): 46-46 (3 GB)
2007 is the only year our elementary analysis credits Soriano for impacting the ultimate outcome of the N.L. Central race. Thus according to the two-tiered model of player valuation, Soriano's value breaks down a follows:
2007
WARP-1: +6.8 (value: $4.420 million)
Playoff Appearance With/Without: Yes/No (value: $25 million)
*Net value: $29.485 million (return: $19.420 million))
2008
WARP-1: +4.9 (value: $3.185 million)
Playoff Appearance With/Without: Y/Y (value: $0)
*Net value: $3.185 million (return: -$10.815 million)
2009
WARP-1: +0.9 (value: $585,000)
Playoff Appearance With/Without (Projected): N/N
*Net value: $585,000 (return: -$16.415 million)
**Net value ('07-'09) [actual - "earned" salary]: $41 - $33.255 million = -$7.745 million
The two-tiered model is admittedly harsh, giving Soriano full credit for the Cubs inspired turnaround in 2007 (culminating in a playoff appearance), while awarding him zero credit for their playoff appearance in 2008. Nevertheless, this is probably fair, as an '08 Cubs team minus Soriano's contributions would've almost certainly made the playoffs in a feeble N.L. Central; Soriano missed 53 games last season anyways, and the Cubs were above .500 in those games. This relatively straightforward picture could fast become complicated however. The possibility exists that the Cubs (currently 2 GB) could end up winning the Central division by a margin less than Soriano's final WARP-1, contingent on his raising this value above one, which he will almost certainly do. In such a scenario, our assessment of his value markedly changes. Say the Cubs win the Central crown by one game over the Cardinals, who also finish 2.0 GB of the Colorado in the Wild Card chase and miss the playoffs entirely. Let us also say that during this time, Soriano doubles his WARP-1, ending the season at 1.8, a value that would currently rank him behind thoroughly underwhelming White Sox 2B Chris Getz. Under the simplistic system I have chosen to employ, Soriano would get credit for the team's playoff berth, and with it the $25 million of revenue set to come the Cubbie's way; with such a contribution, Soriano would have provided a positive net return on his three-year salary. Yet it goes without saying that a player who contributes a 1.8 WARP does not deserve such credit, as he has performed at a well below-average level that season. Concurrently, such a situation would be vastly different from 2007, in which Soriano's All-Star caliber performance propelled the Cubs team to a Central Division title, even though my analysis would assign equal monetary value to each contribution. In the interest of preserving this system and all its simplicity, a condition requiring a league-average WARP for starting position players (which should settle around +4 most years) may be needed; if the player under examination fails to reach this plateau, he would not be credited with a 'playoff appearance accounted for.' As of July 23, such a stipulation is not yet necessary, and if there is any justice in the baseball universe it will stay that way (the recently-completed Matt Holliday to St. Louis deal should help). At the very least it would save me from having to write a second blog post explaining Silver's "market price model" in a desperate attempt to preserve the legitimacy of my point.
Returning to the raw data, it's fair to say that Soriano has underperformed in his three years with Chicago (especially when factoring in his .138 playoff OBP). Still, the degree to which he has done so is not as vast as one might expect. This is almost entirely due to Soriano's boarder-line elite performance in 2007, which propelled the Cubs to a division title, albeit with a mere 85 wins. Take out the $25 million accredited to Soriano for this contribution--or divy it up amongst several key roster components--and Soriano's performance begins to look much, much worse. In actuality, Soriano has not been horrific, he has merely been average. And wildly inconsistent. And often injured. Yes, he is over-payed, but is that even unique enough to be noteworthy? Put another way, has Soriano's contract been any worse than, say, Jose Guillen's 3-year, $36 million deal with Kansas City? The numbers would say no, and they would be correct, as Guillen has thus far provided a net WARP of +0.2 in 233 games with Kansas City (a $130K value, according to our method). But one key difference remains: Soriano still has five year left after 2009, and will be owed a staggering $18 million in his age-38 season. The Royals, on the other hand, will have officially washed their hands of Guillen by next November.
Many will point out that Soriano was not signed for his contributions at age 38, he was signed for his ages 31-35 seasons with the hopes that several playoff appearances (and maybe even a championship) later, natural inflation rates of the free-agent market will make the remainder of his contract swallow-able. This is a good tactic for certain teams at certain times; consider if Roy Halladay was a free-agent this offseason--it certainly would behoove the Phillies to offer Halladay whatever length of contract he desired to get him signed. This is because the Phils are a team with a core of star players either in (Utley, Howard, Ibanez, Werth, Victorino) or just past (Rollins) their primes, along with a mature ace and a sterling bullpen. And a fast-closing window; knowing they can perform for only two-to-three more years at an elite level, they should absolutely try to make as many championship runs as they can in that time, especially considering the startling lack of competition for the N.L. pennant. As was mentioned earlier, when the Cubs signed Soriano, they were riding the septic fumes of a 66 win season--not exactly the same scenario, but if management felt it could fashion a contender while Soriano was still in the latter-part of his prime (which it did), then this argument holds some water. It would hold a hell of a lot more if the deal had been for five years; anything more than that and the Cubbies would have been better off taking a pass. Especially since Cubs management was in the position to dictate when their optimum competitive window would be, based on the free agents they signed. Soriano's signing signalled the immediate switch to a "win now" mentality, and thus necessitated the assemblage of a largely imported team of established big-league players (e.g. Lilly, Harden, Dempster, Fukodome, DeRosa & Bradley). Now the window appears to be closing, and the hundred million dollar question has become: how will Soriano age?
While there's no perfect answer, an easy approximation can be generated by looking at how similar players have fared after their 34th birthday. According to baseball-reference.com, the most similar hitter to Alfonso Soriano (by age) is Matt Williams. The mere fact that we're discussing Matt Williams should bring to light the myriad shortcomings with this line of analysis, nevertheless, Williams delivered a Mike Schmidt performance in his age-33 season, posting a .303/.344/.536 line while banging 35 home runs and driving in 142. The rest of his career, which spanned four seasons and 306 games, Carson Crusher hit a grand total of 44 home runs, only once exceeding a .315 OBP or driving in more than 50 runs. But again, Soriano and Williams are of widely divergent playing styles and body types; perhaps a more appropriate comp comes courtesy of PECOTA: Don Baylor. Baylor logged seven seasons after his 34th (the first four of the "complete" variety), hitting 125 home runs, posting five EqA's over .273 (two over .300) and appearing in two World Series (1986 with Boston, which he lost, and 1987 with Minnesota, which he won). Despite this, Baylor was hardly a standout player, logging only two seasons--his age-34 & 35 campaigns--with WARP's above 4.0 (5.1 & 4.0 respectively), and ending his career with two seasons of essentially replacement-level productivity. Also notable, over this time period he logged 723 games as a DH position, playing zero innings in the field these past two seasons; obviously this is a luxury Soriano will not be afforded. One last point regarding Don, and for those of you who remember Baylor as I do (that is, as a fat DH for the Twins with no remaining knees), this may come as somewhat of a suprise: he once stole 52 bases in a season! (Soriano's career high, coming in his first full campaign, was only 43.) But Baylor never again swiped twenty bags after hitting his 30th birthday. All this is interesting, but what do these comps--and others like them--tell us about Soriano's future prospects? PECOTA thinks it knows, and you ain't gonna like it (projected WARP's for the remainder of his Cubs contract follow):
(2009: 4.0), 2010: 3.3, 2011: 2.5, 2012: 1.8, 2013: 1.3, 2014: 0.5
Correspondingly, PECOTA offers an estimated "MORP" (marginal value over replacement player) for each of his projected WARP outputs. The values are generously adjusted for an 8% inflation in player salaries each year, and are listed in millions of dollars:
2010: $6.500; 2011: $4.875; 2012: $3.575; 2013: $2.700; 2014: $1.300
That's $1.3 million dollars of marginal value over a replacement-level player in a season the Cubs will be paying him $18 million...ouch. In fact, taking the amount of money due to come Soriano's way from 2010-2014 and subtracting from it his MORP, gives a difference of $72.55 million! That difference represents well over three times the value of Soriano's projected MORP performance; staggering numbers, even ignoring the fact that Soriano is currently undershooting his 2009 WARP projection by 3.1 wins. Using our more-elementary system, Soriano is worth only $6.11 million over the final five years of his deal. Adding the $7.745 million dollars in "debt" he has accrued over the deal's first three years to the nearly $89 million in projected "debt" he is expected to over the final five, Soriano will have to deliver four playoff berths (that the Cubs wouldn't otherwise secure) in order to justify his contract.
A lot of people thought that this deal was stupid the day it was signed (myself being one of them), we were just unable to grasp the grandiosity of Hendry's ineptitude until the early returns were in. And if the Cubs are unable to make a legitimate title push this year, in a weak National League, we haven't even begun to see how ugly this could get. So lay off Brian Sabean...Barry Zito has a WARP-1 of 0.7 this season, anyways, pretty damn similar to 'Fonso's. Today, indiscretion has a new name, and its "Hendry."
